Roosevelt Institute | Cornell University

Redefining Prosperity

By Hilary YuPublished April 14, 2014

The ecological footprint is shaped by population levels, affluence, and technology. Although developed societies have relied much on technological innovation to solve environmental problems, rising population levels demand new solutions. We must reconsider our mindset of conspicuous consumption.

By Hilary Yu, 4/14/14

In the 1970s, Holdren, Commoner, and Ehrlich produced the IPAT formula, which reveals the environmental impact of humans. According to the formula, I=P∙A∙T, humanity's impact I is equal to the product of population (P), affluence (A), and technology (T). The IPAT formula provides a simple structure for finding ways to reduce humanity's impact on the environment. According to the formula, a reduction in any factor will reduce the value of I. Society currently relies on technological innovation to reduce resource intensiveness, the environmental impact of creating, transporting, and disposing of goods and services. This approach, however, is no longer sufficient. Populations will only keep growing, even as they come closer to surpassing Earth's carrying capacity. Rather, affluence, shaped by the consumption of each individual on Earth on average, must be reduced.

Decreasing consumption, particularly among affluent people, addresses the underlying problems surrounding the anthropogenic impact on the environment. Jevon's paradox illustrates that improvements in technical efficiency can actually increase consumption and ecological risk. Gains in efficiency often create lower prices, which facilitates greater consumption. For example, an individual would be much more likely to drive a car with a gas mileage of 50 mpg compared to 15 mpg. The latter would have a greater incentive to walk or use public transportation because of the higher price of driving.

 The population factor is also linked to consumption because population increases exacerbate resource scarcity. Many people argue that greater access to and education about birth control is essential for developing countries, which have relatively high birth rates. Nevertheless, individuals in developed countries have far larger ecological footprints due to greater affluence or rates of consumption. (Wackernagel et al) A person in a developed country may have an environmental impact over his or her lifetime twice or three times as large as a person in a developing country.

 Decreasing consumption, particularly among affluent people, is necessary. As Jackson notes in Prosperity without Growth, our lives in the developed world revolve too much around the economy where "Wall Street is the lifeblood of Main Street." (Jackson 21) Jackson argues it is necessary "to set out a coherent notion of prosperity that doesn't rely on default assumptions about consumption growth." (Jackson 30) Affluent people can develop new perspectives about prosperity driven by utility and "capabilities for flourishing," (Jackson 34) rather than conspicuous consumption. People should consider whether purchasing the newest iPhone is actually much more satisfying than using an older, yet perfectly functional, iPhone.

Institutional arrangements driven by governmental action will not solve overconsumption. Some people support a progressive consumption tax based on taxing income remaining after savings and a large standard deduction, yet it seems improbable that the current political climate will be hospitable to a consumption tax. Individuals in developed are unlikely to respond positively to state-imposed regulations on their consumption habits. A more plausible solution might come from an institutional, public-private interaction between the state and market. Governments could indirectly curb consumption by repealing large subsidies provided to oil corporations and logging companies, which would raise gas and lumber prices and subsequently reduce consumption of gas and wood products. Such solutions, however, are very antagonistic to business interests.

Ultimately, changing institutionalized social norms in developed countries about perceptions of prosperity and consumption is essential. Individuals need to reconsider what is important in life.